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Exam 17: Property Transactions: 1231 and Recapture Provisions

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Question 41

True/False

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For § 1245 recapture to apply,accelerated depreciation must have been taken on the property.

A) True
B) False

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Question 42

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If § 1231 asset casualty gains and losses net to a gain,the gain is treated as a § 1231 gain.

A) True
B) False

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Question 43

Multiple Choice

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Verway,Inc. ,has a 2014 net § 1231 gain of $55,000 and had a $62,000 net § 1231 loss in 2013.For 2014,Verway's net § 1231 gain is treated as:

The chart below describes the § 1231 assets sold by the Ecru Company (a sole proprietorship)this year.Compute the gain or loss from each asset disposition and determine the net § 1231 gain treated as long­term capital gain for the year.Assume there is a § 1231 lookback loss of $4,000.

The maximum § 1245 depreciation recapture generally equals the accumulated depreciation.

A business machine purchased April 10,2013,for $62,000 was fully depreciated in 2013 using § 179 immediate expensing.On August 15,2014,the sole proprietor who owned the machine gave it to his son.On that date,the machine's fair market value was $57,000.The son did not use the machine in business or hold it as inventory and the machine was sold on November 22,2014,for $53,000.What is the amount and nature of the gain or loss from disposition of the machine? Where is it reported in the son's tax return?

Describe the circumstances in which the maximum unrecaptured § 1250 gain (25% gain)does not become part of the Schedule D netting process for an individual taxpayer?

Vertigo,Inc. ,has a 2014 net § 1231 loss of $64,000 and had a $32,000 net § 1231 gain in 2013.For 2014,Vertigo's net § 1231 loss is treated as:

A business machine purchased April 10,2012,for $98,000 was fully depreciated in 2012 using § 179 immediate expensing.On August 15,2014,the machine was sold for $67,000.What is the amount and nature of the gain or loss from disposition of the machine?

Part III of Form 4797 is used to report gains from the sale of depreciable business equipment sold at a gain and held more than one year.